Country's largest bank SBI has cut the standard interest rate by 0.05 percent. The marginal cost-based interest rate (MCLR) of the fund has been cut after 10 months intervals. Earlier, the bank had cut rates on one January. This step by SBI can also follow another bank. According to the   State Bank of India website, after the deduction, MCLR on a one-year loan has reached 7.95 percent, which was 8 percent earlier. For one day, MCLR has reduced to 7.70 percent, which was 7.75 percent earlier.  

At the same time, it will now be 8.10 percent for the three-year period, which was 8.15 percent earlier. Meanwhile, Allahabad Bank announced a reduction of 0.15 percent in MCLR. MCLR  on a one-year term loan after this deduction 8.30 percent, which was 8.45 percent earlier.

"There has been a significant outflow of CASA (current account and savings account) deposits. The revision in savings bank rate would enable the bank to maintain MCLR at the existing rates, benefitting a large segment of retail borrowers in SME, agriculture and affordable housing segments," SBI had said.

"Global interest rates are showing an upward bias. However, India is experiencing lower inflation, therefore markets are betting on further reduction in the repo rate by RBI. Financial markets and the banking sector continue to carry the overhang of the demonetization exercise in the form of excess liquidity," IDFC Bank's chief economist Indranil Pan said.

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